price behavior of austrian exporting industry

Abstract or Table of Contents

abstract: many macroeconomic models for open economies assume a price taking behavior in the exposed sector of an economy. entrepreneurs of exposed sectors are considered to produce for a perfect competitive world market. this study conceptualizes price behavior in a more realistic way. exporting firms are assumed to operate on markets with oligopolistic competition. the work investigates whether austrians exporting firms calculate their prices on the bases of costs. the empirical findings for eleven austrian exporting industries supported the price hypothesis for most industries. only for the paper, the glass, and the food industry the null hypothesis the exporters calculate prices on the basis of costs had to be rejected at the 5 per cent level of significance. the empirical findings suggest that the assumption of price taking behavior in many macroeconomic models for open economies need to be reexamined in its validity.;